Election Alters Trade Climate
Democrats Eye Environmental, Labor Clauses

By Peter S. Goodman
Washington Post Staff Writer
Tuesday, November 14, 2006

As Democrats prepare to take control of Congress, incoming leaders are planning to insert labor and environmental protections into pending trade treaties and to demand that the Bush administration adopt similar measures in future pacts it negotiates, congressional aides and government officials said yesterday.

The Democrats plan to insert restrictive provisions into two pending trade deals with Peru and Colombia, measures that would limit duty-free access to the U.S. market for goods made in those countries if factories are found to use child labor or deny workers the right to organize unions.

Republicans have historically opposed restrictive provisions in treaties as against the interests of U.S. business and consumers. President Bush has already signed the Peru accord and is expected to sign the Colombia treaty this month. Democrats plan to take a similar approach to deals still being negotiated by the United States trade representative with South Korea, Malaysia and Panama, Capitol Hill aides said.

The new atmosphere surrounding trade issues was underscored last night as members of the House -- breaking with Democratic and Republican leaders -- voted to reject a normal trade relationship with Vietnam, following that country's accession to the World Trade Organization last week.

At the center of the new trade dynamic is the fate of the president's so-called fast-track trade authority -- the administration's existing power to call for a simple up-or-down congressional vote on trade pacts without opening them for amendments. The administration's authority is set to expire at the end of June. Democratic leaders say they are inclined to renew it but only if labor and environmental provisions are included.

Yesterday, Sen. Max Baucus, the Montana Democrat in line to chair the Finance Committee, said any law reauthorizing the president's fast-track authority would have to "strengthen labor and environmental provisions in some way to win broader Democratic support."

The shift on trade policy is a reaction to more than a dozen years of efforts by the Bush and Clinton administrations to boost trade by opening foreign markets to U.S. goods while allowing greater access to imports from China, Latin America and elsewhere.

The U.S. mood mirrors a world trend, as people on every shore grapple with the challenges of globalization. In Eastern Europe, former communists are returning to power, riding electoral discontent over the loss of jobs. South Korean farmers are protesting the prospect of imported U.S. rice if a free-trade deal is struck. From Ohio to Montana, incoming Democrats made trade an issue in the campaign, accusing Republicans of selling out American workers to corporate interests, and vowing to oppose further trade liberalization.

"For 20 years, we've been told, 'Don't worry, there's going to be a more sophisticated economy, an economy based on knowledge and information,' " said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which represents U.S. factories, including textile mills in Southern states that have been ravaged by competition from China. "Manufacturing? Well, we can supposedly let that go, because we're going to get something better. Well, we've been waiting, and now we're making less money, and workers are told they have to give up health benefits and pensions and wondering, 'How am I going to make it?' "

Such feelings played a role in the voter anger that remade Congress in last week's elections, he said. "It's going to be heavy lifting for the administration to convince Democrats in the House and Senate to give this president the hand to go out and pursue his trade agenda," Tantillo said.

Business leaders took that message from the startling vote in the House last night, which rejected what had seemed a virtual certainty -- the approval of normal trade relations with Vietnam. The vote needed a two-thirds majority, but it failed 228-161, with Democrats voting it down 94-90.

"It sends a very bad signal to the business community," said Nicole Venable, director of international trade and global competitiveness at the U.S. Chamber of Commerce. "This bill should have been a no-brainer."

Analysts have noted that expanding trade has historically been a bipartisan effort. A dozen years ago, President Clinton, a Democrat, relied largely on Republican support in Congress to gain passage of the North American Free Trade Agreement. Trade proponents said that growing commerce has created new markets for U.S. businesses abroad, while stocking shelves at home with low-priced goods.

"Globalized sourcing has brought enormous benefits to the American consumer," said Hallock Northcott, president of the American Association of Exporters and Importers.

For now, both sides in Washington are speaking the language of bipartisanship, a dynamic that is expected to hold for at least a while as some relatively uncontroversial trade issues come before Congress.

Administration officials hope to gain congressional authority soon to renew a set of reduced tariffs for Andean countries, a form of aid in the U.S. campaign to discourage their production of narcotics. Congress must also take up renewal of reduced duties for the world's poorest countries, while extending parts of a preferential trade accord with African nations.

After that, the rhetoric of cooperation could be tested, as the Bush administration seeks approval for free-trade agreements it has already struck with Peru and Colombia. A U.S. government official who spoke on condition that he not be named because he lacks authorization said the administration was "not looking to reopen negotiations" on those treaties. But a Democratic congressional aide involved in trade issues said the leadership would negotiate with the U.S. trade representative to ensure that labor protections are written into the treaties, along with beefed-up enforcement mechanisms. "We want to tighten that up," the aide said.

The details now rest with Baucus and Rep. Charles B. Rangel (D-N.Y.), who is expected to oversee the House Ways and Means Committee. While both presumptive chairman have pledged to engage the administration on trade, they are cognizant that at least some of the groundswell of support for their party was the result of disenchantment over U.S. job losses, including jobs moving overseas.

The fate of the president's fast-track authority may be a litmus test. Eight years ago, a Republican Congress did not renew Clinton's ability to negotiate trade pacts, with leaders in the House reluctant to hand the Democratic president a key victory ahead of the 2000 election. Democrats may make a similar calculation this time.

The administration is expected to make a final push to strike a deal with the European Union and developing nations on the now-stalled global tariff reduction talks known as the Doha round before Bush's existing fast-track authority expires.

That would kick the issue to the Democrats and perhaps test their cohesion, pitting some of the newcomers who are skeptical about trade against those worried about alienating business.

"The Democrats have rhetorically painted themselves into a corner," said Gary C. Hufbauer, a trade expert at the Peterson Institute for International Economics, in Washington. "The leadership doesn't want to be painted as obstructionist on trade."

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